Should You Steer Your Clients Away from Bank of America?

Is Bank of America lying to you? According to former employees, the bank has routinely denied borrowers a chance at loan modification and has given kickbacks to their staff for forcing homeowners into foreclosure.
Should you steer your clients away from doing business with Bank of America as they seek out new home loans?

In Massachusetts, affidavits were filed in a lawsuit, on behalf of a multitude of homeowners in 26 states.

In sworn testimony, former Bank of America employees disclosed how they were told to lie to customers. Simone Gordon, a former employee in the loss mitigation department went on record saying, “Site leaders regularly told us that the more we delayed the HAMP modification process, the more fees Bank of America would collect.”

Five other former Bank of America employees, in sworn testimony, elucidated the opaque systematic processes Bank of America used to increase profits. These insidious actions include frequently denying loan modifications to qualified homeowners, withholding reviews of completed applications, steering applicants into costlier in-house loans, and paying out bonuses to employees for the number of foreclosures they initiated.

Former employees further describe Bank of America’s forceful practice of steering homeowners seeking loan modification away from the government-backed HAMP program, created in 2008 to save millions from losing their homes. In her affidavit, Theresa Terrelonge, a former Bank of America collector, stated, “It was well known among managers and many employees that the overriding goal was to extend as few HAMP loan modifications to homeowners as possible.”
Why the stonewalling? Bank of America could upsell their own “in-house” loans, whose rates were at least 3 points higher than the two percent HAMP rate. A multitude of homeowners who qualified for the HAMP program were forced into more expensive loan modifications.

Bank of America has also been accused of stalling HAMP applications, and then denying all “backlogged” applications. Bank of America stalls for two months and then denies the loan modification to the homeowner, then steers the troubled borrower to a more expensive Bank of America loan with a higher interest rate, in turn making the bank more money … all on the homeowners’ dime.

Bank of America has denied these allegations. A spokesperson said in a statement, “We continue to demonstrate our commitment to assisting customers who are at risk of foreclosure and, at best, these attorneys are painting a false picture of the bank’s practices and the dedication of our employees.”

Big banks are quick to blame their slow bureaucratic processes on the overwhelming mass of troubled loans; however, they have been recurrently cited for the mistreatment of borrowers in their loan modification practices.

It seems that not much has changed since April 2012, when the Big Five (Wells Fargo, Bank of America, Citibank, JP Morgan Chase, Ally Bank) and federal agencies reached a settlement to curb the extensive blunders and improprieties. How should Bank of America address these allegations? What should be done to mend these unlawful acts? Please share your comments below.